TMI Blog2016 (9) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... e ambit of clause (vi) (i). The 2004 circular represented an authoritative yet paradigm shift from what was permitted to hold the field for decades namely, the 1979 circular. The 2004 circular, it may be noted, did not rest itself upon a declaration of the law that roasted groundnut would not be covered. The 1979 circular was issued by the Commissioner of Trade Tax U.P. who was duly empowered in terms of rule 4 of the U.P. Trade Tax Rules, 1948. This circular was clearly binding upon the other subordinate authorities working under and administering the 1948 Act. That then takes us to the issue of whether the 2004 circular had the effect of impacting transactions which had already been subjected to tax prior thereto. To this the answer must obviously be in the negative. The 2004 circular can be rightly described as an outcome of a revisit and a reconsideration of the vexed issue of taxability of roasted groundnut and whether it was liable to be treated as an unclassified item. However the moment one arrives at the conclusion that the 2004 circular was merely an outcome of an exercise of "revisit" and "reconsideration" and not an expression of opinion based upon an authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed till the 2004 circular came to be issued by the Commissioner, Trade Tax. The relevant part of the said circular reads as follows: - As a perusal of the 2004 Circular would show and establish, the opinion of the Law Department of the State Government is stated to have been obtained to clarify as to whether roasted groundnut would stand covered by the entry groundnut as used in clause (vi) (i) of Section 14. This reference to the Law Department itself is stated to have been occasioned on account of a conflict between the circular dated 1979 circular and the letter dated 3 March 2001 addressed by the Assistant Commissioner (Law), Trade Tax, U.P. The Law Department basing its opinion on a judgment rendered by the Supreme Court in Gopuram Gram Mill Company and another Vs. State of Andhra Pradesh [1994 (95) STC 358] held that groundnut as specified in clause (vi) (i) of Section 14 would not encompass roasted groundnut. Accepting the said opinion as submitted by the Law Department, the Commissioner clarified accordingly and passed directions annulling the earlier circular dated 20 July 1979. It becomes relevant to note here that the present revisions themselves relate to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on why the entry should be restricted to only one of them. He submitted that the subsequent decision rendered by three Judges of the Supreme Court in Gopuram did not notice Milak and even otherwise was not dealing with the issue of a commodity in its roasted or finished form and was therefore clearly distinguishable. The essence of the submission being that in case of a state of doubt with respect to the taxability of an item, the circular issued by the Commissioner was liable to prevail and benefits accorded to the assessee. He has in support of his submissions above, relied upon the following judgments: - 1. Collector of Central Excise Patna Vs. Usha Martin Industries (1997) 7 SCC 47 2. Paper Products Ltd Vs. Commissioner of Central Excise (1999) 7 SCC 84 3. State of Karnataka and another Sri Lakshmi Coconut Industries (1997) 11 SCC 621 4. M/s. KBB Nuts Pvt Ltd Vs. Commissioner of Value Added Tax ST. Appl.5/2014 dated 28 March 2014 [Delhi High Court] Sri B.K. Pandey per contra, made the following submissions: - A. The 2004 circular of the Commissioner had in express term annulled the 1979 circular. This recital in the 2004 circular would have to be construed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said judgment may be said to veer around or tend to support the submission of the revisionist, the Court would be justified in treading with caution before applying a judgment which has come to be rendered with reference to the provisions of another statute. This more so when the Court finds that the Customs Tariff Act 1975 did not employ the words that is to say . Similarly Gopuram while dealing with the provisions of the 1956 Act, was construing gram and whether parched or fried gram would stand covered. Of course Gopuram does stress upon and underline the significance of the phrase that is to say in section 14 and holds that no expansive meaning can be accorded to commodities which stand mentioned therein. Therefore it would be safe to say that there is no authoritative pronouncement on the issue as to whether roasted groundnut would stand covered under clause (vi) (i) of section 14. The 1979 circular in unequivocal terms held out that roasted groundnuts would be liable to be considered as falling within the ambit of clause (vi) (i). The 2004 circular represented an authoritative yet paradigm shift from what was permitted to hold the field for decades namely, the 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86) ELT 449]. Of course the appellate authority is also not bound by the interpretation given by the Board but the assessing officer cannot take a view contrary to the Board's interpretation. 22. We may observe particularly that a special aspect highlighted by the Bench in Poulose and Mathen vs. Collector of Central Excise [1997(90) ELT 264] is apposite for fastening the revenue with binding force as regards the instructions issued, while constructing a notification which was not free from doubt, Learned judges in that decision have observed thus: One aspect deserves to be noticed in this context. The earlier tariff advice no. 83/81 on the basis of which trade notice No. 222/81 was issued by the Collector of Central Excise and Customs is binding on the department. It should be given effect to . There is no material on record to show that this has been rescinded or departed from, and even so, to what extent. Even assuming that the later tariff advice No.6/85 has taken a different view about which there is no positive material the facts point out that the concerned department itself was having considerable doubts about the matter. The position was not free from doubt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular dated 7.8.1987, all the three products of the appellant are to be treated as the products of the printing industry and not that of the packaging industry. A change in the said view of the Board occurred for the first time by virtue of its Circular No.6/89 dated 16.1.1989. Further, the Board itself by its subsequent Circular No.29/89 dated 5.5.1989 has made it abundantly clear that the change notified in Circular No.6/89 will be prospective from the date of issuance of Circular No.6/89, that is, from 16.1.1989. Therefore, it is clear that till the issuance of Circular No.6/89 which is dated 16.1.1989 the products of the appellant, by virtue of the two Circulars dated 23.7.1986 and 7.8.1987, have to be classified under Chapter 49 of the Act as being products of the printing industry eligible for exemption of duty under Notification Nos.122/75 and 234/82 as applicable at the relevant time. The impugned show cause notices and consequent demand being ab initio bad inasmuch as the same was contrary to the existing Circulars of the Board, the same cannot be sustained. (emphasis supplied) A Constitution Bench in Ratan Melting summarized the law in the following words- 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law. What is discernible from the law as declared by the Supreme Court is that circulars issued by departmental authorities in exercise of statutory powers is clearly binding on them though not on courts or tribunals. They have been rightly described as representing the views and understanding of the department of the statutory provisions. They continue to hold the field till the view expressed and embodied therein is overruled or eclipsed by an authoritative pronouncement of the High Court or the Supreme Court. Once a precedent comes to be handed down and entered which enunciates the law on the point at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... described as an outcome of a revisit and a reconsideration of the vexed issue of taxability of roasted groundnut and whether it was liable to be treated as an unclassified item. However the moment one arrives at the conclusion that the 2004 circular was merely an outcome of an exercise of revisit and reconsideration and not an expression of opinion based upon an authoritative pronouncement of law by a competent court, it must be treated as having prospective operation. While arriving at the above conclusions, the Court has also weighed in consideration the flux in the legal position and the fact that the issue of taxability of roasted groundnut as an unclassified item was/is an issue not free from debate and question. In such a situation as the Supreme Court held in Usha Martin benefit of doubt must be given to the assessee and that opinion which is in its favor must be given effect to. One last submission of Sri B.K. Pandey which needs to be noticed and considered is his contention that the 2004 circular declared the 1979 circular as void and a nullity and therefore the views expressed therein would be deemed to have never operated. With respect, this Court is unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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